Heads of further education colleges refused funding by the Learning and Skills Council after it overspent its £2.3bn budget by 150% were to meet this week to try and find alternative ways to fund schemes

Of the 180 schemes granted funding by the LSC, 167 are in this position. Mark Dawe, principal of Oaklands College, one of those affected, said the colleges were considering taking on private debt financing or using the PFI.

He said there was still likely to be a funding gap that the government would have to fill in some capacity. He said: “It goes back to affordability – if we borrow lots of money we’ll need support making our payments each year.”

The news follows the intervention this week by a group of senior contractors who wrote to The Times to complain about the cancelling of a £26m project at the National Construction College in Norfolk. The letter, signed by directors at Kier, Willmott Dixon and Laing O’Rourke said the college was “in dire need” of redevelopment.